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Business advice from Esmael Adibi continued ...
Consumers are suffering from several events that are negatively impacting their pocketbooks and their confidence. The erosion of confidence began when home prices declined sharply. Lower home prices evaporated refinancing opportunities for many. In addition, those homeowners who have no problems making their monthly payments have seen their biggest investment losing value. The negative effect emanating from lower home values worsened when the stock market lost more than 50 percent of its value from peak to trough. And since the beginning of this recession, unemployment rates have been increasing every month and have reached post-World War II highs in many regions.
The good news is that the stock market reaches a trough about three to six months prior to the end of a recession. Additionally, we believe that median home prices will be near the bottom by the end of this year, and that should bring some stability in the housing market. These developments should help consumer confidence down the road. But the most important factor affecting consumers’ sentiment is the job market, and that is a lagging indicator and will not improve until early 2010. When that happens, consumer confidence should be boosted.
We should not be surprised to see consumers acting cautiously about their current and future spending plans. After years of borrowing, the de-leveraging process will continue. Don’t expect to see a significant rebound in consumer spending any time soon.
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Andrew J. Policano | Anil Puri | Esmael Adibi
Abe Helou | Linda A. Livingstone | Timothy Peters
Ahmad Hosseini | James G. Ellis
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Business advice from Esmael Adibi continued ...
Consumers are suffering from several events that are negatively impacting their pocketbooks and their confidence. The erosion of confidence began when home prices declined sharply. Lower home prices evaporated refinancing opportunities for many. In addition, those homeowners who have no problems making their monthly payments have seen their biggest investment losing value. The negative effect emanating from lower home values worsened when the stock market lost more than 50 percent of its value from peak to trough. And since the beginning of this recession, unemployment rates have been increasing every month and have reached post-World War II highs in many regions.
The good news is that the stock market reaches a trough about three to six months prior to the end of a recession. Additionally, we believe that median home prices will be near the bottom by the end of this year, and that should bring some stability in the housing market. These developments should help consumer confidence down the road. But the most important factor affecting consumers’ sentiment is the job market, and that is a lagging indicator and will not improve until early 2010. When that happens, consumer confidence should be boosted.
We should not be surprised to see consumers acting cautiously about their current and future spending plans. After years of borrowing, the de-leveraging process will continue. Don’t expect to see a significant rebound in consumer spending any time soon.
<<< Previous page
Andrew J. Policano | Anil Puri | Esmael Adibi
Abe Helou | Linda A. Livingstone | Timothy Peters
Ahmad Hosseini | James G. Ellis
BACK TO MAIN PAGE
Andrew J. Policano | Anil Puri | Esmael Adibi
Abe Helou | Linda A. Livingstone | Timothy Peters
Ahmad Hosseini | James G. Ellis
BACK TO MAIN PAGE
